Japanese PM calls for cross party unity for fiscal reformation

Japanese Prime Minister Naoto Kan on Monday defended his fiscal reform strategy to rein in the nation's burgeoning public debt in a question-and-answer session, at which opposition party leaders pressed the new leader on a number of key issues ahead of the House of Councillors election expected on July 11.

Kan, who took office last Tuesday, fielded a bout of pointed questions from opposition party leaders, including those from Sadakazu Tanigaki, president of the main opposition Liberal Democratic Party (LDP), in connection with the prime minister's first policy address given last week.

The government, who is faced with the monumental task of reining in public debt that amounts to almost twice the nation's GDP plans to lay out both medium and long-term fiscal goals prior to a G20 summit in Toronto next week and Kan, who took office this month, has promised to spearhead economic growth and restore public finances.

"Even if we keep bond sales at 44.3 trillion yen (482 billion U.S. dollars) over three years, the debt-to-gross-domestic-product ratio will still exceed 200 percent," Kan said on Monday, adding " I think we need to uphold this kind of goal at any cost."

"We are fully aware of the need to meet the target and aim to include it in our fiscal goals," Kan told the lower house of parliament.

However, the opposition party leaders suggested that Kan had failed to explain adequately how he will achieve this target and highlighted the fact it would require the ruling Democratic Party of Japan (DPJ) to acquire trillions of yen in new revenue or sharply cut spending on its promised consumption-boosting measures.

To that end, Kan, himself a fiscal conservative, hinted at a controversial tax hike, as others in the ruling DPJ members are calling for a rise in sales tax and want it to be mentioned in the party's manifesto for an upper house election expected in July.

"There will be some reference to the sales tax in the manifesto, " Kan said, adding "the government will soon indicate its intentions regarding overhauling that and other taxes."

Kan in the lower house plenary session also called for unity between parties on the creation of a fiscal restoration team to collaborate on his austerity measures and was met with a degree of consideration from Tanigaki, although the main opposition party leader did call into question the "seriousness" of the prime minister's initial pledge to restore the state's fiscal health.

"I would like to have discussions with everyone regardless of what political party they belong to -- discussions without complicated conditions," the prime minister said.

The net figure for government borrowing and lending is in deficit by 33.5 trillion yen (364.41 billion U.S. dollars) this fiscal year and ratings agencies have warned that Japan's sovereign debt rating could be cut unless a solid recovery plan is enacted.

Tanigaki pressed the prime minister on his pledge to rejuvenate the employment market and his plans to bring this to fruition. Kan, for his part, emphasized that the government will spend money in areas that create jobs.

"We will form budgets based on the criteria of how much economic growth can be expected," Kan said.

The LDP chief also pushed Kan to withdraw the existing policy platform of the DPJ in last year's general election, which led to state spending elevating the nation's fiscal budget in 2010 to a record high. Tanigaki maintained that such a platform ran contrary to Kan's pledge to enhance fiscal discipline.

The opposition bloc also stated that Kan is now responsible for providing a clear and detailed explanation of issues involving his predecessor Yukio Hatoyama and Ichiro Ozawa, former DPJ secretary general, related to their alleged involvement in political funds scandals.

In addition, the main opposition party said that Kan was party responsible for the bungled handling of the relocation plan for a U.S. Marine facility in Okinawa.

"Mr. Kan, who was then deputy prime minister, has heavy collective responsibility for the stagnation and confusion caused by the former Cabinet over the Futenma issue," Tanigaki said.

Kan also drew fire from his heavyweight political opponents regarding allegations last week that three of his ministers might have claimed hefty expenses for running illegitimate offices.

However, Kan's resounding emphasis on Monday was on fiscal reform and he reiterated that the government intends to work tirelessly with the Bank of Japan (BOJ) to pull the nation's economy out of deflation.

"We consider it our urgent task to get rid of deflation. We will work together with the BOJ as one and make comprehensive efforts to put Japan's economy on a sustainable recovery track," he said.

Source: Xinhua